Major zoning bill failed, but legislators see other small gains on housing

The DFL-controlled Minnesota Legislature passed smaller measures this session meant to alleviate the high cost of homeownership and rent, but lawmakers failed to approve a statewide zoning law or prohibit landlords from blocking tenants who pay rent with Section 8 or other vouchers.

A raft of tenant protections was enacted as part of Democrats' 1,400-page tax bill, along with more funding for nonprofits that build affordable housing and work with people to find homes. While DFL lawmakers see progress toward affordable and stable housing, Republicans say they worry more rules will drive up construction costs and rents.

"The fundamental challenge that we have in Minnesota is this huge shortage of homes," said Rep. Mike Howard, DFL-Richfield, who chaired the housing committee.

He said he sees zoning as a tool for increasing supply, and he celebrated a law that will allow Minneapolis' 2040 zoning plan to go forward, even as a larger zoning reform bill failed.

Republicans agree that housing supply is a problem. But they said they wanted to see the Legislature focus less on aid to build and rehabilitate low-cost housing, and more on finding ways to make building in Minnesota less expensive, pointing to lower construction costs in surrounding states.

Sen. Eric Lucero, R-St. Michael, said he wanted, for example, to see less-stringent energy efficiency standards on new homes as a way to cut costs for builders.

"We need to take some serious steps to decrease the cost and increase the supply," Lucero said.

Here's a look at what passed:

More funding for housing

The Legislature approved spending far less on housing this year compared with 2023. Notable pieces include $53.4 million to help pay for new affordable housing by filling the gaps left by other grants and financing with some set aside for Indigenous communities and the Rondo Community Land Trust; $17 million for a workforce homeownership program; $10 million for housing with built-in supports for people with mental health and substance use disorders; $10 million to seed a revolving loan fund for repairs on mobile homes; $8.8 million in assistance to keep families out of homelessness; $150,000 for a nonprofit to study the possibility of an emergency shelter for transgender adults; and $225,000 for a report on buildings with only one exit stairwell, which is not allowed under current code.

Tenant protections

Lt. Gov. Peggy Flanagan said she was glad to see a range of new regulations for landlords meant to protect renters. Landlords will not be allowed to deny a lease to someone who has an individual taxpayer identification number, which some immigrants use instead of a Social Security number. Tenants who ended their leases early because they were victims of domestic or sexual violence, or harassment could move to get evictions erased from their records. Landlords won't be allowed to dissuade renters from calling police if they need help, which Flanagan said is an issue she often hears from renters.

The bill also requires landlords to provide payment or alternative housing for people who are supposed to be moving into new or renovated apartment buildings that aren't finished by the time the lease starts, such as what happened last fall with a Dinkytown student apartment building.

What didn't pass:

Ban on Section 8 discrimination

A provision that would have made it illegal for landlords to deny a lease to someone because they pay part of the rent with a voucher like Section 8 fell short late in the session.

Flanagan said she was frustrated, in part because the issue is personal.

"We relied on a Section 8 housing voucher to secure housing when I was little," she said, saying it enabled her family to live in St. Louis Park. "We were able to access Section 8 and live in a community that was safe and welcoming with a great school system."

Lucero said he did not want to see laws that would give landlords less discretion over tenants. He said he thought this could lead to landlords charging higher rent.

"Missing middle" zoning

A bill that would have made it legal to build duplexes on any residential lot in Minnesota failed earlier in the session. It would have overridden any local zoning codes that require houses and lots to be of a certain size. The bill was opposed by the League of Minnesota Cities and other local government groups but had some bipartisan support and backing from cities where such zoning already exists.

'We took a large bit at the apple when it comes to state level zoning reform to end exclusionary zoning," Howard said.

He said he thinks the conversations around that legislation helped build unlikely alliances between affordable housing advocates and libertarian-minded regulation opponents, and opened a conversation about what could be done.

Howard said he plans to continue meeting with city officials to understand their concerns. He said the primary city lobbying groups are going to work together next year, which Howard hopes will make negotiations simpler.

Rep. Brian Johnson, R-Cambridge, agreed local regulations were sometimes getting in the way of building small homes and could be blocking younger people from homeownership.

"We have homes for the middle and upper-middle class, but we don't have the starter homes," he said.

Similar laws to override local zoning codes were passed in Montana last year and in Colorado this year, Howard said.

What could move next year?

Flanagan said she anticipates more housing infrastructure bonds will be proposed in 2025, to build more workforce housing in the metro and greater Minnesota, and apartments where larger families can live. Housing will remain a priority, she said.

"I think we laid a really solid foundation," Flanagan said. 'We're going to come back at it in future sessions."